– Stock Market Companion – Current Holdings –

(Please scroll down to the end of the report to see your favorite benchmarks – Dollar, Oil, Gold … closing prices and daily direction.)

– Market Trends –

*Summary of terms from Trader Vic II-Principles of Professional Speculation (pg. 140-141)
*_________* Represents a change in trend rating.

– Market Perspectives –

For your added perspective, we’ve included this chart of the broader market (Successful stock investors develop and start with a minds-eye view of the broader market and keep it clear) –

SMC SP-500 ETF Daily Chart (Please click on the chart to see a bigger, easy to read chart on a separate browser tab window).

– Today’s Highlights –

Federal Reserve Open Market Committee Meeting Highlights (sections directly from the meeting minutes)

Unemployment –

Private nonfarm employment expanded in June at about the same modest pace as in the second quarter as a whole, and government employment decreased slightly. The unemployment rate was 8.2 percent in June, the same as its average during the first half of the year. The rate of long-duration unemployment stayed elevated, and the share of workers employed part time for economic reasons was still high. Indicators of job openings and firms’ hiring plans were generally subdued. While initial claims for unemployment insurance trended down a bit over the intermeeting period, they remained at a level consistent with continued modest increases in employment in the coming months.

Housing Market

Conditions in the housing market generally improved further in recent months, but activity remained at a low level against the backdrop of the large inventory of foreclosed and distressed properties and tight underwriting standards for mortgage loans. Both starts and permits of new single-family homes increased in the second quarter. Starts of new multifamily units were about the same last quarter as in the previous quarter, but permits rose, which pointed to higher multifamily construction in the coming months. Home prices increased in May for the fifth consecutive month. Sales of new homes in the second quarter were moderately higher than in the first quarter, but existing home sales decreased slightly.

Manufacturing

Manufacturing production decelerated significantly in the second quarter following a large gain in the first quarter, while the rate of manufacturing capacity utilization was unchanged on balance. The production of motor vehicles and parts increased considerably last quarter, but factory output outside of the motor vehicle sector was essentially flat. Automakers’ schedules indicated that the pace of motor vehicle assemblies in the third quarter would be about the same as in the second quarter. Broader indicators of manufacturing output, such as the diffusion indexes of new orders from the national and regional manufacturing surveys, declined in recent months and were at levels consistent with only muted increases in production in the near term.

Inflation

Overall U.S. consumer prices increased at a slower pace in the second quarter than in the first. Consumer energy prices declined significantly last quarter, and survey data indicated that gasoline prices fell somewhat further in the first few weeks of July. Meanwhile, consumer food prices posted only a small increase last quarter, but the recent sizable run-up in spot and futures prices of farm commodities, reflecting the effects of the drought and hot weather in the midwestern part of the United States, pointed to some temporary upward pressures on retail food prices later this year. Consumer prices excluding food and energy increased more moderately in the second quarter than in the first. Near-term inflation expectations from the Michigan Survey rose a little in June and July, while longer-term inflation expectations in the survey continued to be stable.

Monetary Policy

The information received over the intermeeting period indicated that economic activity had decelerated in recent months, with a notable slowing in consumer spending. Employment gains continued to be modest, and the unemployment rate was unchanged at a level that almost all members saw as elevated relative to levels consistent with the Committee’s mandate. Inflation had declined from its rate earlier in the year, mainly reflecting lower prices of crude oil and gasoline, and inflation expectations had been stable. Members generally expected that economic growth would be moderate over coming quarters and then would pick up very gradually. While most members did not view the    medium-run economic outlook as having changed significantly since the June meeting, several noted that they had lowered their expectations for economic growth over coming quarters. Furthermore, members generally attached an unusually high level of uncertainty to their assessments of the economic outlook and continued to judge that the risks to economic growth were tilted to the downside because of strains in financial markets stemming from the sovereign debt and banking situation in Europe as well as the potential for a significant slowdown in global economic growth and for a sharper-than-anticipated fiscal contraction in the United States. A number of members noted that if the recent modest rate of economic growth were to persist, the economy would be less able to weather a material adverse shock without slipping back into recession. Most members continued to anticipate that, with longer-term inflation expectations stable and the existing slack in resource utilization being taken up very gradually, inflation would run over the medium term at a rate at or below the Committee’s objective of 2 percent. In contrast, one member thought that the economy may be operating near its current potential and, thus, that maintaining the Committee’s current highly accommodative policy stance well into 2014 would pose upside risks to the inflation outlook.

The Committee had provided additional accommodation at its previous meeting by announcing the continuation of the maturity extension program through the end of the year, and more time was seen as necessary to evaluate the effects of that decision. Nonetheless, many members expected that at the end of 2014, the unemployment rate would still be well above their estimates of its longer-term normal rate and that inflation would be at or below the Committee’s longer-run objective of 2 percent. A number of them indicated that additional accommodation could help foster a more rapid improvement in labor market conditions in an environment in which price pressures were likely to be subdued. Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery. Several members noted the benefits of accumulating further information that could help clarify the contours of the outlook for economic activity and inflation as well as the need for further policy action. One member judged that additional accommodation would likely not be effective in improving the economic outlook and viewed the potential costs associated with such action as unacceptably high. At the conclusion of the discussion, members agreed that they would closely monitor economic and financial developments and carefully weigh the potential benefits and costs of various tools in assessing whether additional policy action would be warranted.

– S.I.M.P.L.E. Stock Investing Method tm –
– (Where each investment begins with a Story and ends with Earnings) –

S.I.M.P.L.E. Stock Investing is built upon these core concepts –

S = Story (What is / are the key catalyst(s) behind the company of interest?)

I = Institutional Investor Interest (Is the stock chart showing investor interest = buying or share accumulation?)

M = Market (Is the background market favorable for investing at this time?  Don’t Fight the Market! We know the vast majority of stocks move in the direction of the overall market).

P = Person or Product (Is there a particular person or product that makes the story work for this investment?)

L = Leader (Is the company a leader in its industry group or is its product a leader in its market?)

E = Earnings (Are current quarterly earnings and annual earnings growing?)

Here is our SMC Intra-Day Alert that we sent on 8/24 in the morning, concerning the development at ARENA Pharmaceuticals.  Today, the shares are UP +7.5%.

Dear Member-Friend,

Good Morning.

Arena Pharmaceuticals (ARNA $8.60) is transitioning from a development stage pharmaceutical company (characteristics = no meaningful revenues and huge research and development expenses) into a drug company with real revenues and – hopefully – strong earnings.

In 2010 we profited from speculation that their drug Lorcaserin would receive FDA approval (we sold our shares just before the decision date), and this year AFTER the company finally received FDA approval for their drug.  We again took our profits on this one as things were looking a bit “frothy” and unpredictable.  Approx. +35% on our investment in June.

NOW however, with the news out on their new, marketable drug (Lorcaserin = Belviq) that helps obese patients supress appetite, investors are starting to take real notice and think about the future value of the company based on real revenues and earnings.

The ARNA daily chart is looking very constructive and tight … just the way we like it.  The only “hang-up” is the fact that our US GDP is in a downtrend, and the global economy is looking weak.  We do NOT like investing in individual stocks when the background market is not suitable, BUT this ARNA development COULD continue higher as a rare, very positive story with the backdrop of a negative market.

Please click here for our Successful Investing Video on what we like, a glance at their earnings statement, and where we would put a logical STOP on our investment to protect our principal.

It may be that we will “toe-in” to this investment and place our stop by the end of the day. More conservative investors may want to wait for a confirmation break-out above $8.86. 

To avoid any misunderstandings, please remember that we do NOT make any investment recommendations for any individual.  We cannot know the investment suitability and risk tolerance of each member.  Each investor is on their own.  Please see our disclaimer below.

Your – Stock Market Companion

– Benchmarks “At a Glance” –

–Data Source : Financial Visualizations Inc.